Steve,
Wall Street still likes this stock as a brand-name internet play...
I think you're right about this. The ironic thing is that, if it had its way, AOL would prefer to have nothing to do with the Internet -- way too much uncontrolled competition!
AOL derives its illusion of value from its much-touted on-line service subscriber count. Their move into being an ISP was a step they were more or less forced to take in order to retain and increase their on-line service subscriber inventory. Why is it that all other ISP's aren't able to make hay with their substantial, growing subscriber counts? Are they stupid, undercapitalized, or lazy? Do they have lousy marketing? All they have to do is construct a huge, goofy web-site, add tons of crappy advertising, a couple of security-hole-ridden extras, slap on password access, force the ISP client to log onto their home page, over-subscribe the infrastructure, and they can be an AOL too!
What's the value in this? I don't get it. H&R Block is selling CompuServe to AOL at fire-sale (or is that fair-market value?) prices for these very reasons. AOL, Wall Street's "brand-name Internet play" has a brand-name but doesn't want to play on the Internet. They want a closed, tightly-controlled environment where they can place ads, hustle product, and direct the subscriber traffic. They absolutely hate it when someone logs on and immediately jumps to the Internet and stays there the rest of the day-- no eyeball time. I believe this is why the advertisers find it so hard to get decent subscriber numbers, usage, and demographics from AOL.
Once an on-line service, always an on-line service, and the Internet killed the on-line service business. Look at CompuServe, MSN's stagnation, Genie, Delphi, and Prodigy. AOL is the only one left. What makes them so special? They have survived to this point by marketing slight-of-hand, creative accounting, and deal-making puffery. Ultimately, the growing, competitive, evolving Internet will marginalize AOL, the "brand-name Internet play", too. |
